'Increased supply to cause drop in rents'

Over 20,000 new units are expected to enter the market during the course of the next 12 months which could have a deflationary impact on sales and rental rates. With at least 20,000 new residential units likely to be added to the existing supply of houses in Dubai in 2015, CBRE, a global real estate consultancy, believes the supply could have a deflationary impact on sales and rental rates, Emirates 24/7 reported.
“The residential segment has experienced a period of relative stability during H2 2014, with rental rates remaining broadly flat. Over 20,000 new units are expected to enter the market during the course of the next 12 months which could have a deflationary impact on sales and rental rates,” Mat Green, Head of Research and Consultancy UAE, CBRE Middle East, said in a new report.
The good news, however, is that overall rents in Dubai remained 'broadly flat' in 2014, registering only a 7% increase compared with a 24% rise in 2013.
“Over the past 12 months the sales segment has comprehensively outperformed the rental market, recording an 18 per cent growth year-on-year as compared to 30 per cent in 2013. This disconnect is highlighted as a potential area of concern for the market, with mounting pressures on rental yields as a result,” Green said.